Bank predicted to double mortgage books

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Macquarie Group’s domestic mortgage book is predicted by financial services analysts to double to $30 billion in just two years.

In a research note, JPMorgan analysts describe Macquarie’s push into domestic mortgages as “more meaningful than investors or even Macquarie management themselves may suggest”.

Already, Macquarie’s Australian mortgage portfolio increased by 47% to $17 billion – which represents 1% of the Australian mortgage market – in the financial year ending 31 March, 2014.

Initiatives it took during the year included the acquisition of a 25% stake in mortgage aggregator Connective, the expansion of its mortgage product suite and the establishment of Macquarie Pacific Funding, chairman Kevin McCann said in the bank's annual review.

But while the Big Four may have to watch out down the track, the immediate threat will be to the regional banks.

JPMorgan said regional lenders have the most to lose from Macquarie’s move into mortgages, as smaller institutions such as the Bank of Queensland have recently decided to stay on the periphery, in order “to preserve margin”.

JPMorgan concedes that pitched against the average size of a major bank domestic mortgage portfolio, around $280 billion, Macquarie’s loan book is “relatively small”.